Fewer Small Businesses Are Utilising Traditional Financing Avenues

Following new data which suggests that fewer small businesses are utilising traditional financing avenues, Axis for Business asks what the future is for financing in this vital market.

Axis for Business Strikes up a Conversation with Its Customers

As a telecoms and energy supplier dedicated to providing the most effective service possible, Axis for Business listens to what our customers say. We strive to strike up a conversation, by bringing you the small business industry news that you need to know to ensure that you are able to lift your company’s bottom line.

Which is why when we read that fewer small business across the UK are employing traditional forms of financing i.e. credit cards, loans and overdrafts, we knew you needed to know about it. It raises questions about the role of banks in small business financing, as the UK small business market grows and changes.

Only 30% of UK SME’s Utilise Traditional Financing

Specifically, a new study undertaken by market research firm BDRC Continental of 65,000 small companies, revealed that in the second quarter of this year, 30% of those surveyed were employing these methods of financing. Two years ago, this figure stood at 36%.

Shiona Davies, a director at BDRC commented on the figures, Davies said that “use of, and appetite for, external finance remains broadly stable but we are seeing declining use of, and appetite for, ‘traditional’ core lending products like loans and overdrafts.”

Alternative Forms of Financing for UK Small Businesses

Meanwhile, the survey also discovered that there is a rise in the number of small businesses using alternative methods of finance, such as invoice financing and leasing. This figure has risen to 18% from two years ago. These forms are coming to be seen as more stable financing options in the long term by small businesses across the UK.

These figures have further added to government fears over the rate of lending between big banks and UK small businesses. Recently, the government has commented on more than one occasion, that big bank reluctance to lend to SME’s could halt the momentum of the national economic recovery. As such, in recent months, they have been keen to promote alternative forms of finance i.e. peer to peer lending.

Financing Options for Small Businesses are Plentiful in the Modern Market.

Consequently, Axis Telecoms thinks that these figures are important for UK small businesses going forward.  They suggest that SME’s are no longer restricted to narrow, hard-to-adhere-to, financing cannels in the modern market. Rather, there are a range of financing options out there, which can be tailored to your small business’ specifications, to ensure you can use those funds to increase your company’s long-term bottom line.